Question

Ganga Ltd. purchased a machinery on January 01, 2014 for ₹ 5,50,000 and spent ₹ 50,000 on its installation. On September 01, 2014 it purchased another machine for ₹ 3,70,000. On May 01, 2015 it purchased another machine for ₹ 8,40,000 (including installation expenses).

Depreciation was provided on machinery @10% p.a. on original cost method annually on December 31. Prepare:

1. Machinery account and depreciation account for the years 2014, 2015, 2016 and 2017.
2. If depreciation is accumulated in provision for Depreciation account then prepare machine account and provision for depreciation account for the years 2014, 2015, 2016 and 2017.

Answer 1

(a)

Dr.	Books of Ganga Ltd. Machinery Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2014				2014
Jan.01	Bank (i) (5,50,000 + 50,000)		6,00,000	Dec.31	Depreciation (i) 60,000 (ii) 12,333		72,333
Sep.01	Bank (ii)		3,70,000
				Dec.31	Balance c/d (i) 5,40,000 (ii) 3,57,667		8,97,667
			9,70,000				9,70,000
2015				2015
Jan.01	Balance b/d (i) 5,40,000 (ii) 3,57,667		8,97,667	Dec.31	Depreciation
May.01	Bank (iii)		8,40,000		(i) 60,000 (ii) 37,000, (iii) 56,000		1,53,000
				Dec.31	Balance c/d (i) 4,80,000 (ii) 3,20,667 (iii) 7,84,000		15,84,667
			17,37,667				17,37,667
2016				2016
Jan.01	Balance b/d (i) 4,80,000 (ii) 3,20,667 (iii) 7,84,000		15,84,667	Dec.31	Depreciation (i) 60,000 (ii) 37,000 (iii) 84,000		1,81,000
				Dec.31	Balance c/d (i) 4,20,000 (ii) 2,83,667 (iii) 7,00,000		14,03,667
			15,84,667				15,84,667
2017				2017
Jan.01	Balance b/d (i) 4,20,000 (ii) 2,83,667 (iii) 7,00,000		14,03,667	Dec.31	Depreciation (i) 60,000 (ii) 37,000 (iii) 84,000		1,81,000
				Dec.31	Balance c/d (i) 3,60,000 (ii) 2,46,667 (iii) 6,16,000		12,22,667
			14,03,667				14,03,667

 

Dr.	Depreciation Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2014				2014
Dec.31	Machinery		72,333	Dec.31	Profit and Loss		72,333
			72,333				72,333
2015				2015
Dec.31	Machinery		1,53,000	Dec.31	Profit and Loss		1,53,000
			1,53,000				1,53,000
2016				2016
Dec.31	Machinery		1,81,000	Dec.31	Profit and Loss		1,81,000
			1,81,000				1,81,000
2017				2017
Dec.31	Machinery		1,81,000	Dec.31	Profit and Loss		1,81,000
			1,81,000				1,81,000

 

(b)

Dr.	Books of Ganga Ltd. Machinery Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2014				2014
Jan.01	Bank (i)		6,00,000
	(5,50,000 + 50,000)
Sep.01	Bank (ii)		3,70,000	Dec.31	Balance c/d		9,70,000
			9,70,000				9,70,000
2015				2015
Jan.01	Balance b/d (i) 6,00,000 (ii) 3,70,000		9,70,000
May.01	Bank (iii)		8,40,000	Dec.31	Balance c/d		18,10,000
			18,10,000				18,10,000
2016				2016
Jan.01	Balance b/d (i) 6,00,000 (ii) 3,70,000 (iii) 8,40,000		18,10,000
				Dec.31	Balance c/d		18,10,000
			18,10,000				18,10,000
2017				2017
Jan.01	Balance b/d (i) 6,00,000 (ii) 3,70,000 (iii) 8,40,000		18,10,000
				Dec.31	Balance c/d		18,10,000
			18,10,000				18,10,000

 

Dr.	Provision for Depreciation Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2014				2014
Dec.3	Balance c/d		72,333	Dec.31	Depreciation		72,333
			72,333				72,333
2015				2015
				Jan.01	Balance b/d		72,333
Dec.31	Balance c/d		2,25,333	Dec.31	Depreciation		1,53,000
			2,25,333				2,25,333
2016				2016
				Jan.01	Balance b/d		2,25,333
Dec.31	Balance c/d		4,06,333	Dec.31	Depreciation		1,81,000
			4,06,333				4,06,333
2017				2017
				Jan.01	Balance b/d		4,06,333
Dec.31	Balance c/d		5,87,333	Dec.31	Depreciation		1,81,000
			5,87,333				5,87,333